By Ellie-Rose Davies, Content Executive at IMRG
With London Fashion Week edging around the corner and IMRG Fashion Connect Live and Virtual 2023 just gone by, this blog provides an analysis of the current state of fashion ecommerce in the UK and offers expert advice for a highly ambiguous trading environment in 2023.
Is there light or darkness at the end of the runway?
Data from IMRG’s Index (See Chart A below) shows that the fashion industry missed out on high year-on-year monthly growth during the pandemic as compared to other major online retail categories, such as electrical and home & garden which grew astronomically seen as many people spent the majority of their time indoors.
For most of 2022, the appetite for fashion items grew as pandemic restrictions were of old and customers became more social. However, by the end of 2022, and since the start of this new year, the appetite, in the words of Shakespeare, sickened and so died (See Chart B Below).
At Fashion Connect Virtual 2023, Matthew Walsh, Data and Retail Director at IMRG, revealed our predictions for the total online market and the online clothing category for 2023. This forecast is informed by extensive market research, and considers external factors, such as the cost of living crisis in the UK, that impacts customer behaviour:
How can fashion retailers experience growth in 2023?
While we forecast flat (0%) growth for the online clothing category, this is not to say that fashion retailers can’t start implementing best practices to boost performance. Here are three key focus points for retailers to consider in 2023, recommended by industry experts:
1. Prioritising sustainability in your ecommerce business
There is pressure on all retailers, particularly those specialising in fashion, to have sustainable businesses. ‘Fast fashion’ is a familiar phrase on most customers’ tongues, meaning more customers are now considering the consequences of buying from large businesses that sell thousands of clothing products in unethical or unsustainable ways.
Abby Wong, Consultant at Sovos, says ‘sustainability and social accountability are increasingly important in fashion with the introduction of the Fashion Act in the US and the latest proposal, EU strategy for sustainable and circular textiles. They both highlight the need to promote sustainable fashion with a transparent supply chain and thus tax reforms shouldn’t be ruled out to make this more of a reality.’ Abby exclaims that ‘retailers would be wise to make progress here rather than facing increased tax risks and compliance costs in the future if these are deemed necessary.’
Furthermore, as revealed by Carl Moore, Managing Director – eFulfilment at Wincanton, ‘supply chain partners can work with fashion retailers to reduce environmental impact through the application of innovation, providing visibility which can be shared with consumers. Furthermore, the move from plastic packaging is progressing, and sustainable delivery options continue to be introduced.’
With concerns around fast fashion, Nick Williams, Head of Strategic Partners & Products at PayPoint, declares, ‘Driven by a concern for sustainability and cost of living considerations, the buying and selling of pre-loved fashion is more on trend than ever, providing incredible growth opportunities. While some big brands have set up their own pre-loved fashion outlets, much of the development in this area is driven by individuals selling their unwanted items online on platforms such as Vinted.’
2. Growing customer loyalty through personalisation
Alongside becoming more sustainable, many fashion retailers are opting for a more personalised approach to turn one-off purchasers into loyal customers. Fashion retailers can make their websites more conversational, such as addressing their customers on a first-name basis, using AI technology such as chatbots, offering recommended products, popularised by the likes of Amazon, and personalised offers. The opportunities for retailers to create a more personal, and subsequently personable, fashion business are endless.
Chris Gerber, CEO & Founder at Talon.One, exclaims, ‘In 2022, established retailers embraced the circular economy and sustainability to differentiate themselves from fast-fashion competitors. In 2023, they’re using loyalty programs and discounts to encourage sustainable choices, but to do so without hurting profits, personalized and targeted promotions are crucial. It’s not just about protecting the bottom line, it’s also about maintaining a premium brand image.’
Regarding loyalty, many retailers might be relieved that ‘despite the cost-of-living crisis, fashion is the #1 industry that UK customers remain loyal to’, says Heath Barlow, VP EMEA at Emarsys. ‘55% of Brits continuing their existing fashion spend. But how can that be, when 19% say they “can no longer remain to be loyal?’
‘The answer is personalisation. With 34% of shoppers switching due to a bad experience and 49% due to cost considerations, fashion brands are delivering bespoke communications that reflect customers’ circumstances and preferences in a bid to inspire true loyalty.’ Heath shares that ‘From giants like Puma to trailblazers like Beauty Pie, fashion brands are using omnichannel outreach to deliver an experience that represents customer tastes, through their favourite channels.’
Fashion retailers can make the tedious task of returns more manageable through personalisation. Amal Ahmed, Director of Financial Services & EMEA Marketing at Signifyd, discloses that ‘Fashion retailers who want to succeed in the current environment need to win customers with personalised experiences.’
She continues, ‘As of now, returning something is tedious: you often have to submit a form online, mail the item in, wait for it to arrive at the depot, and then wait another 5-7 business days for a refund. Instead, merchants should look at ways to optimise this process, using data to authenticate who should receive instant returns based on previous behaviour and facilitate these speedy returns in line with speedy purchasing.’
3. Becoming present on various social channels
Social commerce, being the selling and advertising on online platforms such as Instagram, Facebook, and TikTok, has become categorical in marketing fashion retail businesses to large audiences, prompting engagement and loyalty.
Given that IMRG indexed a -10.5% Year-on-Year (YoY) decline in total market online retail growth in 2022, as explored by Alex Vaidya, CEO of StoryStream, ‘There’s a risk that the imperative to “do more with less!” in 2023 might drive brands away from innovation, which feels like a big misstep in 2023.’
Alex states that in 2022, there was ‘an evolution in the consumer mindset – a turn toward social commerce underscored by consumers demanding more from brands: more social proof, greater authenticity in their marketing, and more evidence that a brand’s values align with the consumer’s own.’
‘The opportunity for fashion brands in 2023 will be in turning customers into collaborators, offering new ways to browse and shop online, and delivering a seamlessly consistent experience between social media and the rest of the brand’s marketing ecosystem (site, affiliates, email especially).’
Also, ‘as more social platforms take on a video-first approach, retailers need to ensure they are ready to showcase their brand and products beyond static imagery, says Jennifer Griffin Smith, Chief Marketing Officer at Brightcove. ‘60% of customers surveyed in our E-Commerce Report believe video plays an important role when purchasing apparel, and this percentage is set to increase in 2023.’
‘Live-streamed events, behind-the-scenes footage, and shoppable runway shows will help deepen consumer engagement and enhance brand preference – which will become increasingly important as consumers become more mindful of the environmental impact of their purchasing decisions.’
Sander Roose, CEO and Founder at Omnia Retail, provides an insightful conclusive statement, ‘Fashion retail in 2022 experienced a boom thanks to three factors: The rise of D2C e-commerce; a brick-and-mortar revival after the pandemic; and a surge in social commerce.’ Sander suggests that ‘A D2C strategy with dynamic pricing will allow brands to react to consumer behaviour much faster, enabling them to change the selling price or stock volumes accordingly.’
Giving customers what they want is one way to boost conversion, which has been consistently low according to IMRG’s Index. Many retailers have become more aware of customer preferences, and Sander expresses that ‘while fashion was moving D2C, they were also moving to their Instagram feed, making shopping for clothing easier and more accessible.’
We have lit the fashion runway before you, hoping that all of this advice will inform or complement your growth strategies for 2023, giving you the knowledge to prosper despite the odds.
To keep up to date with the latest in fashion, IMRG’s Digital Dashboard will give you all the information, such as revenue, traffic, conversion rates, and average basket values, at your fingertips. Also, be sure to register for IMRG’s Weekly Data Shows in the ‘Events’ tab to attain weekly insight into online retail category performance.
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